As year-end approaches, you may want to make some moves to make the best tax use of paper losses and actual losses from your stock market investments. For example, have you realized gains earlier in 2022 from sales of stock held for more than one year (long-term capital gains) or from sales of stock held […]
Author Archive | James B. Reynolds
Year-end giving to charity or loved ones
The holiday season is here and many people plan to donate to their favorite charities before the end of the year. In 2022, in order to receive a charitable donation write-off, you must itemize deductions on your tax return. What if you want to give gifts of investments? Don’t give away stock in taxable accounts […]
How savings bonds are taxed
If you own savings bonds, you may wonder: How is the interest taxed? EE bonds don’t pay interest currently. Instead, accrued interest is reflected in their redemption value. (But owners can elect to have interest taxed annually.) Series I savings bond interest is based on inflation. Series I bond owners may either: 1) Defer reporting […]
Adopting a child? Bring home a tax break too
Two tax benefits are available to offset the expenses of adopting a child. In 2022, adoptive parents can claim a credit against their federal tax for up to $14,890 of “qualified adoption expenses” for each eligible child. This will increase to $15,950 in 2023. That’s a dollar-for-dollar reduction of tax. Also, parents may be able […]
How inflation will affect your 2022 and 2023 tax bills
The IRS recently announced next year’s inflation-adjusted tax amounts. For 2023, the standard deduction will increase to $13,850 for single taxpayers, $27,700 for married couples filing jointly and $20,800 for heads of household. This is up from the 2022 amounts of $12,950 for singles, $25,900 for married couples filing jointly and $19,400 for heads of […]
You may be liable for “nanny tax” for all types of domestic workers
You’ve probably heard of the “nanny tax.” But even if you don’t employ a nanny, it may apply to you. Hiring a house cleaner or other household employee (who isn’t an independent contractor) may make you liable for federal income tax, Social Security and Medicare (FICA) tax and federal unemployment tax. You may also have […]
Plan now to make tax-smart year-end gifts to loved ones
Are you feeling generous this year? Taxpayers can transfer large amounts free of gift taxes to loved ones each year with the proper use of the annual exclusion. For 2022, the exclusion amount is $16,000. The exclusion covers gifts that an individual makes to each recipient each year. So a taxpayer with three children can […]
Tax and other financial consequences of tax-free bonds
If you’re interested in investing in tax-free municipal bonds, you may wonder if there are any tax consequences. In general, interest received on tax-free municipal bonds isn’t included in gross income for federal (and possible state) tax purposes. However, it may be included for alternative minimum tax purposes. Keep in mind that a municipal bond […]
Investing in the future with a 529 education plan
If you have a child or grandchild who’s heading to college in the future, you may wonder about investing in a qualified tuition program or 529 plan. You don’t get a federal tax deduction for a contribution, but the earnings aren’t taxed while the funds are in the program. (There may be a state deduction […]
Year-end tax planning ideas for individuals
It’s time to think about steps to lower your tax bill for this year and next. If you itemize deductions, you may be able to deduct medical expenses, state and local taxes up to $10,000, charitable donations and eligible mortgage interest. But these deductions won’t save taxes unless they’re more than your standard deduction ($25,900 […]
